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tv   Bloomberg West  Bloomberg  August 17, 2014 7:00am-8:01am EDT

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>> from pier 3 in san francisco, welcome to the best of "bloomberg west," where we focus on technology and the future of business. i'm emily chang. every weekend we'll bring you the "best of west," interviews with the power players in global technology and media companies that are reshaping our world. it is not just new iphones with bigger screens that apple is working on but also new
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ipads. this as the company tries to get its customers excited about tablets again. they started manufacturing them just in time for the holiday season. a new full sized ipad could be unveiled as soon as this quarter and mini will be available by the end of the year. all of this according to familiar with the matter. it is a move to boost their business. sales fell last quarter to 13.3 million down 9% yearover year. i asked gene what apple can do to get customers excited about ipads again. >> it is probably not going to be that different from the existing ipad. they can add a touch i.d. sensor, and a less glare screen. when are they going to make a bigger ipad, something that is more of a pro version?
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in the supply chain, we're are not picking that up right now. i would not expect that this fall. eventually, i think that is going to happen. to your earlier comments, i think the ipad is still the troubled child. i do not see some of the changes this fall being enough to get that business kick started. there are some other things going on could potentially get that going, as far as this fall, that is not going to be one of the focuses investors are going to be eyeing. >> what about these new iphones? couldn't they cannibalize ipad sales if they are as big as 5.5 inches? >> you're spot on. that's the big one ipad is going to face. it has been down 3% every year, year over year. i think there is going to be cannibalization, and that is a good thing for apple. the reason is that the a.s.p. is going to be around $700 where the a.s.p. on an ipad is about half of that.
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you have higher gross margins, more revenue. i think the best thing that can happen is for apple to cannibalize their ipad sales with an iphone. >> ok. now we have seen reports today that apple is speaking with hospitals about integrating some features in the healthkit, which might be a big feature of ios 8, and in an iwatch, if that is coming. what is your reaction to these reports? what do you know? >> we know that healthkit and omekit will make your ipad and phone do different things in the next few years. i think this is important framework to how we are going to think about apple devices. i would not expect anything game changing in the next 3-6 months. you put homekit and healthkit along with what's happening with the i.b.m. announcement for intersurprise and you start to see how this company can create
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new uses of technology. i think they are doing all the right stuff. i think investors will be satisfied with the updates to the iphone, along with a watch in the near-term. i think longer term the healthkit, homekit and i.b.m. relationship should yield better units. he simple takeaway is that numbers should be inching up as we get into 2015. >> as you are hearing more about what is in the product pipeline, we know tim cook has said it is the greatest pipeline in 25 years. another apple executive says that. do you believe that? now that you have some clues about what's coming? >> we have thought a lot about that. we have gone back and pieced together all the things we are talking about. if you are checking the box for the greatest roadmap or the greatest product releases, i think this is going to be close
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to it. as far as the number of things that are going to happen, it is the biggest in the last 25 years. as far as the actual impact to the model, that is debatable. obviously, the iphone transformed the company, and all these combined will not transform apple like the iphone did. depending on your perspective, if you look at the quantity of announcements, i think they are spot on. if you look at the substance of it, it is definitely a positive, but not to the same magnitude as the iphone. >> how confident are you that an iwatch is coming this year? give me a percentage. >> i would say there is an 85% chance it happens this fall. there are still plans in asia. i think at the end of the day, the only reason this does not happen is they kill it at the 11th hour, which is highly nlikely. >> up next, buzzfeed is building some serious buzz about itself. we tell you what the company plans to do with the $50 million
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it just raised from andreessen horowitz, next. ♪
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>> welcome back to the best of "bloomberg west." i'm emily chang. buzzfeed, the website popular for lists and general news gets an opportunity to grow. in true buzzfeed style, here are the top five things you need to know -- buzzfeed is getting $50 million in series e funding from andreessen horowitz. with partner chris dixon joining the buzzfeed board. they have now -- buzzfeed's fund is a reported $850 million. it has raised over $96 million in funding. they will convert to buzzfeed motion pictures which will produce short clips and full-length movies and let them expand internationally to india, mexico, germany and japan.
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they are among the top 10 most visited news and information sites with an average 150 million monthly viewers compared to 31 million viewers for the "new york times" website. for more on buzzfeed, i spoke with paul kedrosky. i started by asking him if they can become a giant media company. >> i think it is a giant media company. it's just not the kind of media company you and i might most like. i was listening to your list of the top five things we should know about the buzzfeed eal. the only thing was a bullet that nded with cap. that's a joke -- the attraction is they kind of hacked our attention and the ability to its stuff in front of people, find out what is appealing and turn it into a list and generate traffic. that is a business.
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whether that means it is anything bigger than what it looks like is really hard to see. lots of companies look like toys in their early growth days and that's sort of the pitch here. taking it to something much more profitable is difficult to see. i struggle to figure out how that works from here. >> you have so many tech titans investing in new media. jeff bezos buying the "washington post"." andreessen has been particularly alleged on new media and journalism. he recently tweeted i'm more optimistic/glitch about the uture of news over the next 20 years that almost anyone i know. it will grow 10 times to 100 times. do you agree with that? >> i think media -- and we are a living example, we are going through a wrenching transformation. i think it's going to get much larger. i just think it is not going to look anything like what it currently looks like all stop in
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so far as we are asking whether buzzfeed is the next "new york times" or bloomberg, the answer is no. we are creating an entirely different warm up the edits not going to look anything like now. one of the pitches they made in making this deal was that it exemplifies this. full stack investing model that chris dixon and others have, the notion this whole industry needs to be reengineered from top to bottom and the old suppliers are not going to be there anymore. i think that's what you're seeing here. so the notion it's going to turn into something we are familiar with this completely wrong and that will make some people resort to despair. >> joining me is the founder of igaom. you lived inside as an insider at gawker and a huffington post. can these companies the profitable? can they make -- >> absolutely. if you look at buzzfeed, they
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re profitable according to the "new york times" article. but i think paul is on to something here. you have to stop looking at these companies as news companies and more as attention companies. if you have the attention, you have the business. if you have the attention, advertisers want to go there. you can sell people other things. you can sell them movies. you can sell them music. you can sell them e-books or whatever. i think buzzfeed is in a good position to capture that big part of the media market because some of the older guys are just doing the same old, same old. they've done it good job at going through a more nimble, social oriented media company. i think we should stop comparing. they're not all the same company. they are very, very different. i think what my company does is different from what buzzfeed is
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and we are essentially doing generally the same business but not the same industry. >> how profitable can they be? you and i have talked about the value of clicks, but one kind of click is more valuable than another. one kind of user is more valuable than another. 75% of buzzfeed traffic comes from social media. is that dangerous? are they overly reliant on social media? >> absolutely. that is a risk every media ompany runs. i think buzzfeed has that risk, but there are many more large lot forms today. you have pinterest, tumblr and so forth. they have a little less risk compared to the previous generation players.
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>> on the profits point, that's the weakest criticism we can make. their costs are minimal compared to a traditional media organization. they are not sending people around the world establishing buzz the bureaus with the latest in taiwanese list. they don't need to do that. you can put together cap lists from anywhere. their costs are much lower than traditional media companies, so if anything, it could be intensely profitable. the biggest risk is that the algorithms change and their traffic shrinks dramatically. that is what they have to engineer against. >> they are not establishing bureaus in taiwan to make lists, but i was looking closely at the eporting in the ukraine when the malaysian plane went down. they're working more on longform print journalism. are they giving companies like "the new york times" a run for their money? >> i think they're being different. i don't think they are doing what the "new york times" has done. they are looking at a new model for a whole new generation of
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viewers, readers. people who want to be entertained. we have this holier than thou notion of news and at the end of the day, what buzzfeed has done is turn that into a light entertainment package. they send somebody to ukraine to do a serious story but there is value in that. the reality is the majority of the business is going to come from being ntertainment-oriented. >> what about major motion pictures? paul, what do you think of buzzfeed doing full-length feature films? >> i don't like it, but mark is much smarter than i am. maybe they have figured omething out here. the graveyard of roque and media companies and broken investment is longer than demand. look at the inventions with elevation partners. there are many different attempts to build around entertainment and around content
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products and particular movies. it is difficult to see how that is a profitable venture on top of something with pretty interesting economics on its own. i struggle to get that. i understand the movie industry is broke and tv is beating up on it in many ways, but that doesn't turn it into a justification for being a movie nvestment vehicle. >> is video -- no one has really been able to crack the real value of video. it is difficult to organize. you can't just click on it quickly. is there something to be said for putting a lot of investment there? >> youtube has done a good job at making money off of video and so has netflix. >> short content is the key, right? >> right. either do the short content the way youtube does. he netflix model where you
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aggregate -- nobody wants to watch a two-hour movie but you can watch two or three episodes of a television series in a row. that is where the opportunity s. i have heard the decentralized company will try to do something similar. >> it's an interesting time. the challenge is to not get ambitious. do it better and smarter and faster in different environments. i think that will be a good balance for them to find some news and entertainment. so let's see how it goes. i don't think this is such a bad investment from andreessen orowitz. >> well, after fleeing and returning to the u.s., john mcafee is back in the tech game with the focus on protected internet privacy.
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he joins us next on the best of bloomberg west." ♪
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>> welcome back to the best of "bloomberg west". i'm emily chang. john mcafee made his name creating early antivirus software, and years later made headlines later after fleeing belize where authorities wanted to question him as a person of interest in the murder of an american businessman. now, he is back in the tech game with a company called future tense systems, that builds radix to protect her some old data. he recently spoke at defcon and said google and laziness are the biggest things eroding our privacy today. john joins us now from an ndisclosed location.
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>> google makes its money, and so does facebook, by collecting information. if it did not collect information, it would go broke. the information it collects is, where are you? what are you buying? what are you doing? what do you like? what do you dislike? it is an intrusive system that has invaded every part of our lives. it is not just google. most of the free apps you download, you give permissions. you can turn the camera on, listen to you, send messages, read your messages, read your -mail. it is astonishing, the freedoms we have given up or the privacy we have given up willingly. that is laziness. google needs to have another paradigm for making money, because this cannot continue. >> you say google is not the only company. you are singling google out. what other companies would you point out? >> i would say facebook would be number two, but google is by far the front runner in the invasion of privacy for the average citizen.
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it is shocking how much google knows about you. google would have you believe that if you have nothing to hide, why would you care? i have to take issue with that. privacy is a very important ight that all humans have. i mean, there are some people, for example that may be having affairs. i hear that happens. some people may call into work saying i am sick today but they are not really sick. we all tell little fibs that allow us to live a tolerable existence. if these things are taken away, if we are practicing an alien religion in the baptist belt, we are going to have a very hard time if we cannot keep that to ourselves. >> one of the things you said you have done to protect your own privacy is gotten rid of our smart phone. you have already gotten rid of it.
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what is that like? >> i used to change phones every week anyway. i will talk about it a little in a minute. i think the biggest thing i have done is, i started -- and this is why i went to defcon. i wanted to announce my new ebsite, brown it is a way to give power back to the little man. it is ostensibly a complaint site, where you complain about something. i was audited unjustly by the i.r.s. whatever. what you cannot just submit a complaint. you have to submit a olution. these solutions and complaints go into the pie and as people read them, they may add their own solution. these solutions are then voted on. it is a way to get anger out of the negative arena and back into the positive arena. we already have 100,000 users per day that are filing complaints from everything from, i got a parking ticket unjustly, i got a speeding ticket, exxon is dumping oil in my backyard, my congressman sucks. hatever.
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but you have to have a solution with it. i am going to be, on monday, posting my own complaint, the belizian government is trying to kill me. i will put the documentation him, the whole ball of wax. there will be a lot of people who are very embarrassed. it is a well-known fact that people are after me. my security guards at defcon -- there was very strange activities while we were there. and it all stems from belize. that's where the money comes from. there is a company in daytona beach, florida cauls called a.a.i. we have a video of a man named jean lewis, from las vegas, hiding behind a tree with his phone sticking out, trying to take a video of me. when he was caught, he ran away and pretended like he was on the phone. all of this data is going to go online. this is how i am using my own website to complain about things that bother me. >> i do have to ask you about belize.
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last we checked, the case had gone cold. what have you heard? have authorities contacted you at all? what is the latest? >> i was never charged. i was never even suspected. they just wanted to question me like they questioned all of my neighbors. i just chose not to be uestioned. there are no charges. the only thing they did is, they admitted that they confiscated all my property and auctioned it off. it was a lot of property, by the way. it was every penny that i had. the u.s. government is happy with me. i have no outstanding warrants. i have a few parking tickets, and that is the extent of it. >> why the need for secrecy if you are innocent? if you didn't do anything wrong, why not disclose your location? why change smartphones as often as you can? >> because the government has paid a lot of money to remove me because i continue to speak out about belize. i do have all of this evidence about vast corruption in belize. they do not want that released.
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they could bring the government down, or certainly the prime minister, who i have on tape ordering the murder of people. you know, it is a dangerous thing to have. they want to silence me. i do not like to be quiet. that is very obvious. i will not shut my mouth. that is my problem. >> beyond the tech products you have been building, you are working on books and movies. what is the status of those, and who should play john mcafee in he feature film? >> i do not know who is going to play me. i hope it is not danny devito. the feature film is coming out in, i think, eight months. spike tv is doing a two-hour documentary. they are choosing the director for that. that should come out in a short period of time. there is a book humming out. paramount is doing one based on josh davis's e-book.
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i have nothing to do with that one. i do not particularly care for josh davis as a writer. but, again, that is their thing. >> john mcafee, sounder of uture tense systems. can san francisco compete with the tech community and its deep pockets? that is next on the best of "bloomberg west." ♪
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>> we focus on technology and the future of business. i'm emily chang. evictions are on the rise in san francisco as the tech boom is driving home and rent prices way up. average rent is more than $2000 a month but some tenants with
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